CPS Technologies Q4 Earnings Call Highlights

CPS Technologies (NASDAQ:CPSH) closed out fiscal 2025 with what management described as the best revenue year in the company’s history, driven by strong product demand, higher shipments, and expanded production capabilities. On the company’s fourth quarter earnings call, President and CEO Brian Mackey and CFO Chuck Griffith also outlined plans for a manufacturing facility relocation, provided an update on HybridTech Armor, and discussed federally funded research programs and recent capital equipment investments.

Record revenue year and fourth quarter results

Mackey said fiscal 2025 sales totaled $32.6 million, calling the result a milestone and a “strong comeback” from the prior year. For the fourth quarter, Griffith reported revenue of $8.2 million, up from $5.9 million in the fourth quarter of fiscal 2024. He said the year-over-year increase was driven by strong demand and higher shipments, supported by the company’s third shift and expanded production capabilities.

Griffith noted fourth quarter revenue declined from third quarter levels primarily due to extended customer holiday periods, particularly for overseas customers.

Margins, profitability, and commodity cost impacts

Fourth quarter gross profit was $1.2 million, or about 14.6% of sales, compared with a gross loss of $0.3 million a year earlier. Griffith attributed the improvement to higher revenue and greater manufacturing efficiencies, but said margins stepped down versus the third quarter due to lower revenue and the “dilutive impact” of sharply higher gold costs. He explained that some CPS products are gold-plated and that the company’s margin on the added gold cost is “nominally zero,” meaning higher gold prices can weigh on gross margin percentage.

In the question-and-answer session, Griffith said gold prices had more than doubled from about a year earlier and estimated the impact can be “maybe a point or two” of margin depending on quarterly volume. He also cited inventory growth as a headwind to margins because of conservative inventory valuation practices, which can result in costs being expensed before corresponding sales occur. He added that during the relocation period—when production is reduced—there could be an opposite effect.

Selling, general, and administrative expenses were $1.3 million in the fourth quarter, compared with $1.0 million in the prior-year period. Griffith said CPS continued to manage costs while ramping production and investing for growth, noting SG&A remained “fairly constant” through fiscal 2025.

The company posted an operating loss of about $100,000 for the quarter, compared with approximately $1.3 million last year. CPS reported net income of around $12,000, or $0.00 per share, compared with a net loss of about $1.0 million, or $0.07 per share, in the prior-year fourth quarter.

Balance sheet and capital raise

Mackey highlighted a secondary offering completed in the fourth quarter that raised $9.5 million in net proceeds, saying the strengthened balance sheet leaves the company in better shape than in “recent memory.” He added that management expects 2026 to position CPS for higher growth longer term.

Griffith said CPS ended the year with $4.5 million of cash and $8.8 million in marketable securities. He also discussed working capital items, noting trade accounts receivable totaled $5.2 million at the end of the period, while inventories increased to $4.5 million from $3.5 million at the start of the fiscal year, reflecting increased production and customer demand. Payables and accruals were $4.3 million, compared with $4.0 million in fiscal 2024.

Facility relocation plan and capacity expectations

A central theme of the call was CPS’s plan to relocate to a larger manufacturing facility nearby, funded in part by capital raised in October. Mackey said the current site is space-constrained and limits the company’s ability to respond to demand, particularly now that the third shift of metal matrix composite manufacturing is fully operational.

The company recently selected Dacon Corporation as general contractor to help evaluate sites, negotiate a lease, and manage build-out work to meet manufacturing requirements. Mackey said the move is anticipated to begin “several months” from now, with the total move taking several months as equipment and work centers are transferred and revalidated. In response to analyst questions, management said CPS had narrowed its search to a short list of facilities and expected to make a site decision within several weeks to about a month.

Mackey said CPS is building inventory ahead of the move to help support customers during periods of disruption. He also said prospective sites are close to the current facility, which should help minimize workforce disruption by limiting commute changes.

Looking beyond the move, Mackey said the new facility should provide operational efficiencies, reduced facility maintenance expense, and a better working environment. He also said CPS expects additional capacity in the new facility, supported by both increased floor space and equipment that will be delivered directly to the new site, with some “generally uncommitted” space earmarked for future opportunities.

HybridTech Armor and federal research programs

On HybridTech Armor, Mackey said that following passage of the FY 2026 Defense Bill, Kinetic Protection—CPS’s partner and prime contractor—is optimistic that U.S. Navy-related orders will resume in the latter half of the current calendar year. He said earlier orders (2021–2024) supported crew-served weapon stations on aircraft carriers, while the anticipated future orders would cover a small quantity of Navy destroyers, with funding secured for ballistic shields on “a handful” of vessels. Mackey said detailed contract negotiations are expected to begin in the coming months.

Mackey also discussed government-funded R&D efforts. Since re-engaging in the SBIR and STTR programs in 2021, he said CPS has received 13 awards from the Department of Defense or Department of Energy. He noted the programs lapsed at the end of the prior federal fiscal year (September 30, 2025) because they have not yet been reauthorized, limiting proposal reviews and new topic publication. However, he said CPS’s four ongoing contracts—one Phase I and three Phase II—continue to be executed and funded without interruption. He added that CPS had recently seen indications that Congress reached a compromise enabling reauthorization, potentially through September 30, 2031, with full approval possibly later in the month.

Mackey highlighted recent investments in capital equipment, including a higher-capacity mill for the AlMax product line that now processes ceramic fiber at twice the previous rate, and a new sintering oven supporting Phase II of an Army-funded controlled fragmentation tungsten warhead program. He said CPS is producing 40-millimeter warhead samples with unique geometries intended to exceed Army performance benchmarks. He also pointed to ongoing DOE-funded work in radiation shielding, including development and testing of larger-scale samples and evaluation of lightweight MMC radiation shielding applications across industries.

During Q&A, management also addressed commodity exposure. Mackey said aluminum is a relatively small portion of product cost and does not have a large margin impact, though he described it as a potential headwind and noted the sales team can incorporate cost changes into pricing for customers with more frequent ordering patterns.

The call also included leadership commentary, with Mackey noting Griffith’s plans for retirement and saying the company is actively searching for a successor.

Looking ahead, Mackey said CPS expects 2026 to be “a year of solid revenue” as it completes the relocation and lays groundwork for longer-term growth, with the new facility intended to support higher demand, additional gross margin initiatives, and expansion into new markets over time.

About CPS Technologies (NASDAQ:CPSH)

CPS Technologies Corp is a materials technology company specializing in the design and manufacture of advanced engineered composites and metal systems. The company develops bonded metal components, high-performance polymer composites and ceramic-to-metal brazed assemblies that address the demanding requirements of high-temperature, high-stress and high-frequency applications. CPS Technologies’ product portfolio includes thermal management solutions, electromagnetic interference (EMI) shielding materials, structural composites and electronic packaging substrates tailored for critical end markets.

Serving the aerospace, defense, electronics and energy industries, CPS Technologies works closely with original equipment manufacturers and system integrators to deliver custom materials solutions that reduce weight, improve thermal efficiency and enhance mechanical performance.